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Unit 1 Basic SettingsLesson: Organizational Settings1. The client is the highest level in the SAP ERP system hierarchy2. Each client is a technically independent unit with separate master records and a complete set oftables and data.3. the most important organization unit of fin. Accounting is the company code.4. A company code represents an independent balancing/legal accounting entity.5. Financial stt required by law can be created at company code level.6. A minimum structure necessary in SAP ERP financials.7. To create a company code, copy an existing company code using “copy company code” function. Thiscopies the following data a. Definition B.global settings C.costomizing ledger accounts D.account determination8. Defining a company code a. 4 character co. code key b. company name c.city d.country e. currency f. language9. Global parameters a. chart of accounts b.fiscal year c. co. code defaults

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10. In the SAP ERP std system, company code code 0001 is a template for a general company code withthe international chart of accounts INT and no special country specifications.11. The country installation pgm not only creates a country specific company code template but also acountry specific template for controlling areas, plants, purchasing orgns, sales orgns, credit controlareas, financial mgt areas and so on.12. When you define business area, you only have to enter a four digit alphanumeric key and a shortdescription.13. Segments have ten characters; companies have six characters (either numeric or alphanumeric)14. Other important units in F.A a. Business area: it represents separate areas of operation within an orgn and can be used across company codes. b. profit center: the profit center invoice evaluates the success of individual independent areas within a company. The aim of the profit center invoice is to provide an internal analysis of profits. c. segment: d: company: a company can contain one or more company codes. e. functional area15. The use of business areas, profit centers, segments, companies and functional areas is intended tosuit the requirements of customers’ internal and external accounting. Unlike company codes, the use ofthese objects is optional.16. A controlling area identifies a self contained organizational structure for which costs and revenuescan be managed and allocated.17. More than one company code can be assigned to one or more controlling areas. Assigning morethan one company code to the same controlling area is possible only if all the assigned company codesuse the same operating chart of accounts and have same fiscal year variant.Lesson: Basic Settings in General Ledger Accounting 1. Each client has exactly one leading ledger, while additional non-leading ledgers are used for other requirements. 2. The main ledger reflects the accounting principle used to draw up consolidated financial stts. It is integrated with all sub ledgers and is updated in all co. codes 3. SAP provides the leading ledger 0L and totals table FAGFLEXT with the std system. 4. You can also define non- leading ledgers (parallel accounting), for example, for local regulations. This is known as the ledger approach in the new G.L 5. It is not necessary to define an additional ledger per co. Code for each local accounting principle; a non-leading ledger is sufficient for the purpose

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6. If you use multiple ledgers, you have the option of defining a different fiscal year in non-leading ledgers. 7. There is only one leading ledger. Only the values from the leading ledger are posted to CO in the std system. 8. In account approach , different valuation approaches and valuations are posted to different accounts 9. A scenario defines which fields are updated in the ledgers (in the general ledger view) during posting (from other application components). 10. Scenarios provided by SAP a. Cost centre update b. Preparation for consolidation c. Business are d. Profit centre update e. Segmentation f. Cost of sales accounting 11. A ledger (always the leading ledger ) can be assigned one or more scenarios, or even all six at once 12. Multiple/non- leading ledgers are useful for portraying accounting in accordance with different accounting principles. 13. You do not necessarily have to define non leading ledgers, which mean scenarios do not have to be assigned to non leading ledgers either. You do not need a ledger for each scenario.Lesson: Variant principle 1. The variant principle is a three step method in the SAP system to assign particular properties to one or more objects. The three steps are a. Define variant b. Determine values for variant c. Assign the variant to the objects 2. The main advantage for using variants is that it is easier to maintain properties which are common among several business objects.Lesson: Fiscal Year 1. The fiscal year can be defined as a. Year independent: The number and start and end dates for the periods are the same for every year. b. Year specific: Periods can vary from year to year 2. To assign business transactions to different periods, you have to define a fiscal year with posting periods. 3. The fiscal year variant contains the definition of posting periods and special periods. special periods are used for postings that are not assigned to time periods, but to the business processes of “year end closing”. In total, you can define 16 periods. 4. The system derives the posting period from the posting date. If the posting date falls within the last normal posting period, you can post the transaction in one of the special periods. 5. If the posting date falls in the 12th period, you can post the transaction in one of the four special periods instead.

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6. Standard fiscal year variants are already defined in the system and you can use them as templates. 7. The fiscal year variant does not specify whether a period is open or closed. This data is managed in another table. The fiscal year variant only defines the number of periods and their start and finish dates. 8. If each fiscal year of fiscal year variant uses the same number of periods, and the posting periods always start and end on the same day of the year, the variant is year independent. A year independent fiscal year variant can be defined as: a. Calendar year b. Non- calendar year 9. If the fiscal year is defined as the calendar year, the posting periods are equal to the months of the year. Therefore, a fiscal year that is a calendar year must have 12 posting periods. 10. If the fiscal year is defined as non calendar year, you have to define the posting periods by assigning end dates to each period. A non calendar year can have between 1 and 16 posting periods. If the non calendar year does not start on January 1st , the periods of the year that belong to the former or the coming fiscal year must have an indicator -1 or +1. 11. A fiscal year variant has to be defined as year specific if one or both of the following conditions is fulfilled. a. The start and the end date of the posting periods of some fiscal year will be different from the dates of other fiscal years. Some fiscal years use a different number of posting periods. b. If all the fiscal years of a fiscal year variant have the same number of posting periods, only the different period dates for the different years have to be defined 12. If one year of a fiscal year variant has less posting periods than the others, it is called a shortened fiscal year. This could be required, for example, if closing has to be carried out before the end of the normal fiscal year 13. You have to define the shortened fiscal year and its number of posting periods before you can define the period dates. For this year, you can only assign a lower number of posting periods.Lesson: Currencies 1. A currency key must be assigned to every currency used. Most currencies are already defined in the SAP system with std international currency keys. Each currency key can have a validity date. 2. For every combination of two currencies, you can maintain different exchange rates which are distinguished by an exchange rate type. These different exchange rates can be used for various purposes such as valuation, conversion, translation, and planning. 3. The relationship between currencies must be maintained per exchange rate type and currency pair using translation ratios. This usually has to be performed only once. 4. Because inflation can heavily influence the relationship between currencies, translation ratios can be maintained on a time period basis. 5. To reduce maintenance, SAP ERP offers several tools. For each exchange rate type you can use one of the following tools a. Inversion b. Base currency c. Exchange rate spreads 6. Exchange rate spreads between the bank buying/selling rate and average rate usually remain constant. If the exchange rate spread of an exchange rate type is entered in the system, you

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only have to maintain the average rate since the buying and the selling rate can be derived from by adding/subtracting the exchange rate spread to/from the average rate.7. A base currency can be assigned to an exchange rate type. You then only have to maintain exchange rates for all other currencies into this base currency. A translation between two foreign currencies is calculated via the base currency, that is, by combining two exchange rates.8. In direct quotation, one unit of foreign currency is quoted for the local currency, whereas in indirect quotation, one unit of local currency is quoted for the foreign currency. a. Direct quotation : 1 $ = 1.07021 euro b. Indirect quotation : 1 euro = 0.93439 $(euro =local currency)9. For each currency pair you can define either the direct quotation or the indirect quotation as the std notation for the exchange rate. If the exchange rate you enter does not have the same quotation as the std quotation set up here, the exchange rate is highlighted to show this.10. In many companies, the maintenance of the exchange rate table TCURR is shared by several employees. The following problems can occur a. Employees maintain incorrect exchange rates b. Employees maintain the exchange rates with incorrect quotation c. The table is very large, and is maintaining it is very time consuming d. The table TCURR cannot be maintained by more than one user simultaneously11. As a release of R/3 Enterprise you can define work lists and then maintain the exchange rates using the transaction TCURMNT. This has the following advantages. a. Only the relevant exchange rates can be maintained. You can also assign authorizations for work lists. b. Only the relevant quotation can be maintained. c. The work list is smaller and therefore clearer. d. Parallel processing is different is possible.12. Exchange rates can be entered as a direct or indirect quotation. You can maintain two prefixes that can be used to differentiate between direct and indirect quotation exchange rates during input and display. if you do not enter a prefix, the std setting is valid. a. “ “ (blank, without a prefix) for direct quotation b. :/” for indirect quotation exchange rates13. If you work mainly with direct quotation and only rarely use indirect quotation, you should use the std setting. In this way you can enter direct quotation exchange rates without prefix.14. If you increasingly use indirect quotation as well as direct quotation, you should define an alternative prefix for both. For example: a. “*” for direct and “/” for indirect quotation. b. If you allow this suggestion, the configuration does not allow exchange rates to be entered without a prefix, an error message occurs.15. If indirect quotation is the most widely used notation at your company, you can configure the settings this way; a. “*” for direct quotation , “”(blank) for indirect quotation b. This configuration allows indirect quotation exchange rates to be entered without a prefix whereas the less used direct quotation exchange rates have to be entered with a prefix.

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Unit 2 Master dataLesson: General Ledger Accounts 1. The three steps to create and use a chart of accounts; a. Define the chart of accounts b. Define the properties of the chart of accounts c. Assign the chart of accounts to company codes 2. The chart of accounts is a variant that contains the structure and the basic information about general ledger accounts. 3. You define the chart of accounts with a four character ID 4. You define the individual components of the chart of account, for example, language, length of G/L account number, group chart of accounts, status. 5. The chart of accounts must be assigned to every company code for which accounts are to be set up based on the structure concerned. 6. The definition of a chart of accounts contains; a. Chart of accounts key b. Description c. General information i. Maintenance language ii. Length of G/L account number d. Controlling integration i. Manual or automatic creation of cost elements e. Consolidation i. Group chart of accounts f. Status i. “blocked” indicator 7. The maintenance language is the language in which account descriptions are maintained. 8. The length of G/L account numbers can be from 1 to 10 digits. 9. Via the type of integration between general ledger accounts and cost types, you can control to what extent the cost master record is maintained when you maintain the G/L account master records of profit and loss stt accounts. 10. When you save a new G/L account, the corresponding cost type is created automatically. 11. The pre requisite how ever, is that a default value for the cost element category is defined for this cost element, since if no default value exists, the system assumes that no cost element is to be created. 12. You can assign a group account number for each G/L account. This account number is used for cross- company code reporting if the company codes use different chart of accounts. If you enter a group chart of accounts in the chart of accounts, the system defines that you have to enter a group account number in the corresponding field on the G/L account definition. 13. A chart of accounts that is not yet completed can be blocked so that no company code can use it until it is ready. 14. Every company code must have a chart of accounts assigned to it. One chart of accounts can be assigned to several company codes.

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15. The controlling component uses the same chart of accounts as the financial accounting component. If company codes intend to use cross- company code controlling, they must use the same chart of accounts.16. The charts of accounts contain basic information about the accounts. The information for an account is summarized in a chart of account segment. It contains; a. Account number b. Name of the account c. Control fields d. Consolidation fields17. If the chart of accounts has not been translated into appropriate logon language, the account name appears in the maintenance language.18. The chart of accounts segment consists of several group of fields; a. Type/description i. Control in chart of accounts ii. Description iii. Consolidation data in chart of accounts b. Keyword/ translation i. Keywords in chart of accounts ii. Translation c. Information i. Information in chart of accounts ii. G/L texts in chart of accounts19. The information entered in the chart of account segment for G/L account applies to all company codes.20. You can define and change the layout of the tab pages for the individual processing of the G/L account master data. You can define; a. The number of tab pages b. The title of tab pages c. The field groups that you require and their position on the tab pages d. You can select the lay outs for central processing, and processing in the chart of accounts and company code specific data.21. To use one of the accounts from the assigned chart of accounts in your company code, you must create a company code segment for the account. This company code segment is added to the chart of accounts segment, and together they form the account.22. The company code segment contains information that refers exclusively to the company code concerned. This information controls the entry of accounting documents and the management of accounting data.23. The company code segment consists of several group of fields; a. Control data i. Account control ii. Account management iii. Joint venture b. Bank/interest i. Document creation ii. Bank/financial details iii. Interest calculation c. Information i. Information

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ii. G/L account texts24. The company code segment for the same G/L account can be different depending on the requirements of the company code.25. You define the information that is relevant to each company code; a. Currency b. Taxes c. Reconciliation account d. Line item display e. Sort key f. Field status group g. House bank h. Interest calculation information26. For the chart of accounts segment, texts are managed by text ID and language.27. Every company cod that wants to use an account from the assigned chart of accounts has to create its own company code segment. Because the number and name of the account is maintained in the chart of accounts, the account has the same name and number in all assigned company codes.28. Since a chart of accounts contains many different types of accounts, they can be grouped into different account groups. Usually , one account group groups accounts with the same tasks within the general ledger29. By assigning a number range to an account group, you can ensure that contains of the same type see within the same number range. Number intervals for G/L account master records can overlap.30. G/L a/c numbers are however unique. Once a number has been assigned to G/L A/c, there cannot be another A/c with the same number in same chart of accounts.31. The numbers can be alphanumeric only in external number ranges.32. The field status enables to control the display and maintenance of an account’s master data. a. You can assign that you do not use the status Hide b. Fields whose values must not be changed can have the status Display c. For fields where you must enter a value, you can define the status Required Entry d. Fields that can contain an entry, but are not required, can be set to Optional Entry e. SDRO(suppress ,display, required and optional)33. Certain fields are grouped together and their field status is valid for the entire group, e.g., interest calculation indicator, interest cycle, and last interest calculation key date.34. The fields “Account currency” and “Field status group” are always required entry fields. This cannot be changed.35. Fields which is suppressed may contain values and these values take effect.36. Reconciliation accounts are general ledger accounts assigned to the business partner master records to record all transactions in the sub ledger.37. All postings to the sub ledger accounts are automatically posted to the assigned reconciliation accounts. The general ledger is therefore always up to date.38. You define a G/L account as a reconciliation account by entering one of the following account types in the field Reconciliation Account for Account Type; a. D for Accounts Receivable b. K for Accounts Payable39. Amounts cannot be posted directly to reconciliation accounts40. Transaction figures are the totals of line item postings on the debit or credit side. The balance is the difference between the debit and the credit transaction figure.

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41. The field “Line Item Display” is a control field in the company code segment of an account.42. For accounts without “line item display”, only the transaction figures are updated when a document is posted to this account. When an user wants to look at this account online, they can view the balance43. For accounts with “line item display”, the most important data from the posted line items is stored in a special index table. Because this data is also stored in the documents, it is redundant and needs additional storage and system time. When a user wants to look at this account online, they can view both the balance and the individual line items.44. Since the line item display takes up additional system resources, you should only use it if there is no other way of looking at the line items.45. You should activate the line item display for a. Reconciliation account b. Revenue accounts c. Material stock accounts d. Tax accounts46. The active new general ledger accounting has an “entry view” and a “general ledger view” for a document.47. In general ledger view , the line items on all accounts are always visible48. Items in accounts with open item management are specified as open or cleared49. Accounts with open item management must have line item display activated.50. Open Item Management(OIM) is a prerequisite if you need to check whether there is an offsetting posting for a given business transaction, you can display open and cleared items separately, and therefore it is easy to see which business transactions still need to be cleared.51. You should use OIM for the following accounts; a. Bank clearing accounts b. Clearing accounts for goods receipt/invoice receipt c. Salary clearing accounts52. You can only activate or deactivate OIM if the account has a zero balance.53. If the account currency is the local currency, the account can be posted to in any currency. The other currencies are converted into the local currency for each line item.54. If the indicator ”Only balances in local currency” is selected in the master data record, transaction figures are only managed for amounts converted into local currency55. You should select this field for clearing accounts where you want to clear accounts by assigning items with the same local currency amount with one another, without necessitating exchange rate difference postings56. Accounts with a foreign currency as account currency can only be posted to in this foreign currency a. Manually i. One step: create both segments simultaneously ii. Two step: 1. Chart of segment 2. Company code segment b. Copying i. Copying an individual G/L account with reference to another G/L account ii. Copy the entire company code segment iii. Copy the entire chart of account segment c. Data transfer i. Transfer a new chart of accounts from an external system

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57. You can change the master data in the chart of accounts segment, company code segment, or the names of several G/L accounts at the same time. The G/L accounts can be from different chart of accounts. 58. You can make changes to the displayed G/L accounts; a. You can select the fields to be changed b. You can change the values of the fields displayed. Enter the new values in the column “New Values” to replace the existing values. For all G/L accounts selected, the old value is replaced with the new value. 59. Some company codes may have use special chart of accounts because of legal requirements. If this is the case, the following procedure applies for internal reporting; a. You can use a group chart of accounts. This group of accounts must contain all of the group accounts. b. The group chart of accounts must be assigned to each operational chart of accounts. If this is done, the field “Group account number” in the chart of account segments of the operational chart of accounts is a required entry field. c. You must enter the group account number in the chart of accounts segment of the operational account. Different accounts of one operational chart of accounts can refer to the same group account. d. You must use a financial stt version for the group chart of accounts 60. Because the company codes use different operational chart of accounts, no inter- company code controlling can be performed. 61. An alternative to using a group chart of account is to use a country chart of accounts. All company codes use the same operational chart of accounts. 62. Company codes that nevertheless require a special chart of accounts for external reporting have the following option; a. A country chart of account is assigned b. The country chart of account number is entered in every company code segment. Every country chart of accounts number can only be used once 63. Since all company code post into the same operational chart of accounts, cross company code controlling is possible. 64. Accounting clerks who may be familiar with the country charts of accounts first have to get used to using the operational chart of accounts 65. To create reports using the country chart of accounts , the board of the group has decided to define country specific chart of accounts for the company codesLesson: Profit Center and Segment 1. The field / characteristic segment is a new std account assignment object which is available from the SAP ERP solution onwards in order to create evaluations for objects/entities below the company code level 2. Alternative account assignment already used (in practice) which are still available a. Profit center b. Business are c. Profitability segment d. User defined field 3. A business segment is a part of a company;

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a. That carries out business activities that generate revenues and for which expenses can be incurred(including revenues and expenses in connection with transactions with other areas of the same company) b. Whose operating profits are regularly inspected by the main decision maker of the company with regard to decisions about the allocation of resources to this segment and the evaluation of its profitability c. For which there is corresponding financial information 4. The business area or profit center objects can be used as alternatives 5. An ERP system enables you to save a segment in the master data of a profit center 6. The segment is posted to automatically when the profit center is posted to 7. There is no “dummy segment posting”, as in the profit center logic- if the profit center does not have a segment, there is no segment account assignment either. 8. The segment is derived from the characteristic profit center because this already exists in various SAP objects, and the characteristic segment is automatically derived from this. 9. In many business cases, particularly in logistics, you cannot enter a segment manually. Various std interfaces do not support the segment either. For these reasons, using segments is officially approved only if you are also using profit centers. 10. If it is not possible to derive the characteristic segment from a profit center master record, other ways must be found of assigning a segment. 11. Document splitting provides the following options; a. Manual entry b. BadI implementation c. Defining substitution rules d. Std account assignment 12. Profit center accounting has its historical origin in controlling. However, due to its increased significance for external accounting, it is now also a part of financial accounting. Each individual company decides whether Profit Center Accounting is an instrument of internal or external accounting.Lesson: Customer / Vendor Accounts 1. Just like general ledger accounts, customer and vendor accounts have two segments. a. One segments at client level that contains general data. This data can be accessed throughout the whole organization. b. A segment at company code level, that contains company code specific data. Any company code that wishes to do business with a specific customer or vendor has to create a company code segment for this customer or vendor. This also creates a customer or vendor account. 2. Because the sales and distribution dept also stays in contact with a customer and has to know specific data about this customer, a sales area segment can be created for each customer. 3. A complete customer account consists of the following 3 segments. a. General data at the client level b. Company code segment c. Sales area segment 4. The account number is assigned to the customer at the client level. This ensures that the account number for a customer is the same for all company codes and sales area 5. There may be other sales areas doing business with the customer as well. 6. A complete vendor account consists of the following 3 segments

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a. General data at the client level b. Company code segment c. Purchasing area segment7. The system offers separate functions for maintaining customer master records depending on the requirements of your organization. These data records can be maintained centrally for all areas or separately for financial accounting and sales and distribution8. When implementing both accounts receivable and sales and distribution, members of both of these implementation teams must work together to decide how to configure customer master records and who will be responsible for their maintenance.9. As for customer master records, vendor master records can be maintained centrally for all areas or separately for F.I and M.M10. You can prevent the creation of duplication account as follows; a. Use the match code before you create a new account. b. Activate the automatic duplication check11. For each number range you can define whether the number assignment is external or internal. Internal numbers are assigned by the system, whereas external numbers are entered by the user who creates the record. External numbers may be alpha numeric.12. With internal number assignment, the system always assigns the next number available in the range to a new account. If you want to know how many numbers are left in a specific number range, you can display the current number.13. With external number assignment, the user chooses the account number. Numbers do not have to be assigned in sequence; therefore, a current number cannot be displayed.14. For all customers or vendors with whom you rarely do business, create a special customer and special vendor master record. These master records contain receivables and payables for one- time customers/vendors (one time accounts).15. In contrast to other master records, a one – time account master record does not contain any information about a specific customer/vendor since this account is used for more than one customers/vendors. Therefore, the customers/vendors-specific fields should be hidden.16. You enter the customers/vendors specific data for one time customers/vendors in the document during posting.17. The account group is used to control the fields displayed in the master record. For example, to ensure that all correspondence has complete address information, you must change the field status so that all address fields are marked as “ required entry”18. The lay out of customers/vendors master data screens can be affected by several factors. a. Account group specific control; usually the field status is controlled only by the account group. This means that all accounts of one account group have the same screen lay out b. Transaction dependent control c. Company code dependent control19. You now can define that one person makes changes to customers/vendors master data while another person is responsible for confirming the changes, usually for critical customers/vendors changes.20. If you define a field in the customers/vendors master record as “sensitive”, the corresponding customers/vendors is blocked for payment if the entry is changed. The block is removed when a second person with authorization checks the change and confirms or rejects it.21. The confirmation for the changes can be made for a single customer/vendor or you can get a list. This list can be restricted by; a. customers/vendor b. company code

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c. accounts not yet confirmed d. accounts rejected e. accounts to be confirmed by me f. you can display the changes to the customer or vendor master record for all accounts using reports RFDABL00 or RFKABL0022. if a customer is also a vendor or vice versa, the payment and the dunning program can clear open items against each other. The open items of the assigned account can also be displayed in the line item display and the open item selection screens.23. To clear open items, you have to carry out the following steps: a. You have to enter the vendor account number in the customer account, or vice versa b. Each company code can decide separately whether it wants to clear open items between customers and vendors. If clearing is to be used, you have to select the “Clearing with Vendor” field in the customer account, or the corresponding field in the vendor account.24. At the client and company code level, you can enter an alternative payer/payee. The entry in the company code segment has higher priority than the entry at client level.25. There are several options for using this function within the master record. If you set the “Individual Entries” indicator when creating an invoice, you can enter information about an individual payee/payer for a customers/vendor that has not been created in mySAP ERP>26. If the alternative payee/payer is an existing customer/vendor, you can enter the customer/vendor account number as permitted payee/payer in the master record.27. If you enter an alternative payer, the amount to clear the due open items in the account is paid by the alternative payer.28. If you enter an alternative payee, the amount that the company has to pay to clear the open items due is paid to the alternative payee.29. Customers in some industries place orders locally (i.e., via their branches), but pay invoices centrally (from the head office). There is a difference between the goods flow and the cash flow. You can reflect this in the SAP system via head office and branch accounts.30. All items posted to a branch account are automatically transferred to the head office account. Usually, dunning notices go to the head office and it is the head office that makes and receives payments. However if the “decentralized processing” field is selected in the head office master record, the dunning and payment programs use the branch account instead.

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Unit 3 Document ControlLesson: Document Structure 1. The various business transactions require different data within a document. Some data may be mandatory for specific postings. 2. The SAP System works on the basis of the document principle; A document is saved for every posting. The document remains as a complete unit in the system until it is archived. 3. Every document is uniquely identified by the following fields: a. Document number b. Company code c. Fiscal year 4. Documents in SAP ERP Financials contain the following: a. A document header(information that applies to the entire document) b. Between 2 and 999 line items (information that specific to the line item). When you post documents via the AC interface (erg, from sales order management, purchasing management, or other applications), it creates items in the accounting document that are identical in almost all of the fields. 5. Two important control keys : a. Document type for the document header b. Posting keys for the line items 6. The SAP system generates at least one document for every business transaction. Each document receives a unique document number. 7. A business transaction can create one or more documents. For example, when goods arrive from vendor, a material document is created to record data that is important for inventory management. An accounting document is created to record financially relevant information such as G/L accounts and amounts. 8. In the system, documents are generated for the various business transactions, without an accounting document being created at the same time, because accounting is not affected. An example of this would be a purchase order in M.M. 9. Related documents are linked in the system so that you have an overview of every business transactions in the system. 10. The document type controls the document header and is used to differentiate the business transactions to be posted, for example, vendor invoices, customer payments, and so on. 11. Document types are defined at client level and are therefore valid for all company codes. The std system is delivered with document types that can be changed or copied. 12. Document types define the following: a. Number ranges for document numbers b. Account types permitted for postings 13. Document types also define the following: a. The field status of the “Document Header Text” and “Reference Number” fields in the document header. b. Whether invoices are posted with the net procedure. 14. In the procedure recommended by SAP for storing original documents, the document type controls document storage. Always store the original documents under the number of that system document.

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15. If the original document has an external number: a. Enter the external number of the original document in the “Reference Number” field of the system document. b. Note the number of the system document in the original document16. Important standard document types a. DR : Customer Invoices b. DG : Customer Credit Memos c. DZ : Customer Payments d. SA : G/L account Postings e. AB : General Documents f. KR : Vendor Invoices g. KG : Vendor Credit Memos h. KZ : Vendor Payments i. KN : Vendor net invoices and credit memos17. To transfer billing documents from the SAP ERP billing system, you need one of the following document types a. RV , the default document type for Sales Order Management billing documents b. RE , the default document type for M.M billing documents18. When internal number assignment is used, the system assigns a new number to each document in the Financial Accounting component. In external number assignment , the system transfers billing document number to the accounting document, providing this number has not already been assigned19. The payment program uses mostly the document type ZP for its automatic postings.20. The document number range defines the range of numbers that must be assigned as document numbers. These number ranges must not overlap.21. The document number range must be defined for the year in which it is used. There are two options: a. To a fiscal year in the future: At the beginning of a new fiscal year, the system continues to use the number after the current number as the next number. It does not restart at the first number of the number range. b. For every fiscal year: At the beginning of a new fiscal year, the system starts again with the first number of the number range. This helps to ensure that the number range is sufficient.22. If the ledger solution is mapped in new G/L Accounting, different ledgers can use different fiscal year variants. This is a very rare case. It is then necessary to make special settings for these ledgers in customizing.23. Document number ranges are stored for the general ledger view24. The number ranges are assigned to the document types for the general ledger view25. If the ledger solution is used in new G/L Accounting, document types for pure postings in a non – leading ledger must be assigned separate number ranges. This is done to ensure that there are no gaps in the document assignment in the leading view.26. One number range can be assigned to several document types. You can copy the intervals of document ranges from one company code to another, or copy intervals from one fiscal year to another.27. The posting key has control functions within the line items. It controls: a. To which type of account the line item can be posted to b. If the item is posted as a debit or credit c. The field status of additional details

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28. Like document types , posting keys are also defined at client level29. In addition to the control functions mentioned above, the posting keys also specifies: a. Whether the line item is connected to a payment transaction. This information is required for analyzing the payment history and creating payment notices. b. Whether the posting is sales relevant and the sales figure of the account is to be updated by the transaction, for example, by the posting of a customer invoice.30. The posting keys have been enhanced for the EnjoySAP document entry functions. In the std transactions, posting keys are labeled “debit” and “credit”31. The following default values are provided in customizing for the SAP ERP system a. For GL account posting : “Debit” is posting key 40, “Credit” is 50 b. For customer invoices : “Debit “ is 01 , “Credit” is 50 c. For customer invoices “Debit” is 31, “Credit” is 4032. When you enter documents, different fields are displayed depending on the transaction and the accounts used. For example, when you post expenses, the cost center and tax data normally have to be specified. In contrast, this information is not required when you post cash. What information is displayed when a document is processed is controlled by the field status.33. As a general rule, you define the account-dependent field status for general ledger accounts in customizing. For customer and vendor data, you define the posting key dependent field status in customizing according to your requirements.34. As with field statuses defined for fields in G/L accounts, the field status with the higher priority is used.35. Exceptions to this rule are: a. If business area is used, the business area field must be ready for input. You can activate it by enabling business area financial stts for the company code. You can only use the field status to define whether the field is a required or an optional entry field. b. Entries in tax fields are only possible if the general ledger account is relevant for tax36. The hide field status cannot be combined with the required entry field status. This combination causes an error.37. For each group of general ledger accounts, for example, cash accounts, expense accounts, you have to define the status of every document entry field. When documents are entered for these G/L accounts, should the text field be required, optional, or hidden?38. This information is divided into field status groups for each groups of G/L accounts.39. You assign field status groups to the respective G/L accounts in the G/L account master records.40. The field status groups are summarized in one field status variant.41. The field status variant is assigned to your company codes. No posting can be made until this is complete. Typically, you assign the same field status variant to all of your company codes so that the same field status information applies across company codes.42. Various field status groups are available in the std SAP ERP system. We recommend that you copy the std field status group and modify them as necessary.43. If a document is pasted to a sub ledger account, the field status group of the reconciliation account is used.44. SAP recommends that you use the std posting keys delivered. If you change them or define new posting keys, all tables containing a reference to these keys must also be updated.45. Posting keys for assets and materials may only be used if the corresponding SAP components are installed.46. By changing the field status definitions of posting keys and the field status group, you can make the field status transaction dependent or account dependent.

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47. Since the sub ledger accounts do not have a field status group, postings are differentiated mainly by means of different posting keys. For this reason, there are numerous posting keys for sub ledger accounts. 48. Posting to G/L accounts are mainly differentiated by means of different field status groups. Therefore, only two posting keys (40 and 50) are required for G/L account postings. 49. In addition to the account and posting keys dependent field statuses for postings, mandatory fields are also controlled centrally for document splitting objects(such as the segment or profit center) when document splitting is used.Lesson: Posting Periods 1. Posting periods are defined in the fiscal year variant 2. To prevent documents from being posted to an incorrect posting period, you can close certain posting periods. 3. Usually the current posting period is open and all other periods are closed. At the end of a period this period is usually closed and the next period is opened. 4. You open a posting period by entering a range in the posting period variant that encompasses this period. You can have as many posting periods open as desired. 5. During period closing, you open special periods for closing postings. 6. During closing, two period intervals must be open at the same time. Therefore, two period intervals can be entered in the posting period table. 7. Several company codes can use the same posting period variant. For all company codes assigned the posting periods are opened and closed simultaneously. This simplifies the period maintenance. 8. Posting periods can be handled differently for different account types i.e., for a certain posting period, postings to customer accounts may be permitted while posting to vendor accounts may not. 9. As the line item level, the system checks the account type of the posting key to ensure that the period is open for the assigned account type. 10. During closing, two period intervals must be open at the same time. Therefore, two period intervals can be entered in the posting period table. 11. An authorization group may be assigned to the fiscal period interval. Then, only users belonging to this authorization group have the permission to post in the first period interval. It makes sense to use the first range for the special periods and authorize only the accountants involved in closing to post in the special periods. 12. The user must have the authorization for the authorization object F_BKPF_BUP (accounting document: Authorization for posting periods) with the same value in the field “authorization group” as in the posting period table. 13. With the new G/L accounting, there is also the option to control more precisely which values for which individual account assignment objects can be posted, and when. 14. When entering a document, among other items, you enter the posting date – the system automatically determines the posting period and fiscal year based on the posting date entered.

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15. In the document overview, the posting date, posting period, and fiscal year are displayed. The posting period determined is entered in the document and the transaction figures for this posting periods are updated. 16. If you display the balance of an account, the transaction figures for the posting periods are displayed.Lesson: Posting Authorizations 1. The maximum amounts are defined per company code in “tolerance group”. This is also where the processing of payment difference is controlled. 2. In tolerance groups you can enter upper limits for the following: a. Total amount per document. b. Amount per customer /vendor item c. Cash discount a user with this tolerance group is able to grant. 3. The currency is the local currency of the company code. 4. You can create as many tolerance groups as you like. Every user can be explicitly assigned to a tolerance group. 5. If users are not assigned to any special tolerance group, then the entries in tolerance group “___” are valid for them. 6. Tolerance group “_____” usually contains values which are meant to apply to most employees. 7. For any employees who have especially high or low limits, a special tolerance group should be created and assigned to their user logon ID’s.Lesson: Simple Documents in Financial Accounting 1. The SAP financial accounting component uses one posting transactions for several different postings, for example: a. G/L account postings b. Customer invoice postings c. Customer credit memo postings d. Vendor invoice postings e. Vendor credit memo postings 2. You enter the general data for the posting document on the screen in the document header, for example, invoice and posting date, text, and so on. For entering invoice and credit memos received, you can define a document type for each transaction, which then appears as a general default value. 3. If you do not define a document type, the system proposes at document types 4. With customer and vendor invoices, you enter the business partner data in this section together with the invoice or credit memo amount. When you then choose enter, the business partner master data is also displayed alongside the account name, address, and bank details 5. You can select different fields or columns and change the size of sequence of the columns and fields. You can also copy line items.

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6. At the top of the screen, you can select from Park, or Hold, to complete the document entry transaction once the balance is zero 7. For complex postings you can access the complex transaction via the menu. You cannot return to the initial screen from this complex posting transaction. 8. You can enter an explanatory text for the line item. This item can be used internally or externally. If you want to use the texts for external purposes, for example, in correspondence, dunning notices, payment advice notices, and so on, enter a “*” in front of the text. 9. In Customizing, you can define text templates under a four digit key – these text templates are copied into the line item when you enter the relevant key in the text field during document entry. Unit 4 Posting ControlLesson: Document Splitting 1. A financial accounting document always has two views in general ledger accounting: a. The entry view b. The general ledger view 2. Besides the leading ledger, you may also see the document in other, non-leading ledgers in the general ledger view. 3. Entry view: view of how a document appears to the document creator and therefore how it is shown in the sub ledgers 4. General ledger view: view of how a document appears (only ) in the general ledger 5. Displaying a document in the entry view and general ledger view is defined in the new G/L accounting and cannot be switched on or off using customizing. 6. In the std system, new general ledger accounting offers the following for a characteristic analysis under the company code, such as segment reporting: a. The segment, profit center, and business area fields which are by default components of the new G/L accounting totals table (FAGFLEXT) b. FI drilldown reports based on the totals table FAGFLEXT 7. Displaying the profit and loss stt by profit center, business area, or segment is never problematic, since the positions which have an effect are always provided with unique corresponding objects by the original controlling object. However, if a balance sheet is to be created for one of those objects, the problem is that the line items cannot be split the entry view. This only happens in the G/L view, using document splitting. 8. Document splitting is only for customers who have to or want to enter a further characteristic (such as segment) on the balance sheet, in addition to the company code.

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9. The entities defined as splitting characteristics (balancing characteristics) are inherited in non- account-assigned posting lines.10. Document splitting (also often called online split) ensures that companies can create complete balance sheets for desired objects.11. If document splitting is not activated, there is usually no difference between the entry view and the G/L view.12. Document splitting is initially activated in customizing across all clients.13. Inheritance means that when you create a customer invoice from a revenue line, for example, the (unique) characteristics are projected to the customer and tax lines in the G/L view.14. The default account assignment can be used to replace all account assignments that could not be derived from the posting with a constant “value”15. Splitting method 0000000012 is the default procedure provided by SAP, and is usually copied to a client entry.16. Since document splitting can be activated for each client and deactivated for each company code, the decision of whether to split the document or not is made at company code level. However , all company codes of a client can only one document splitting procedure,ie, different procedures cannot be assigned to different company codes17. The inheritance concept: If an account assignment object is unique in a document, it is inherited online in all missing positions. The indicator should always be set when document setting is activated.18. The default account assignment concept: It is possible to work with default account assignment, i.e., if the position is not provided with the necessary object for any reason, then a default value can be set automatically.19. Note that using a default value can reduce the data quality. Incorrect document splitting rules are then not recognized, since every missing object is replaced by this constant. If you want to use default account assignment, carry out a test without default values, in order to find any possible errors.20. You can divide the document splitting process into three steps: a. Passive document splitting i. During clearing, the account assignments of the items to be cleared are transferred to the clearing items ii. This step is not customer specific b. Active (rule based) document splitting i. The system processes a specific document spit due to (standard or customer defined) splitting rules. ii. Splitting rules can be configured. c. Creating clearing lines/ zero balance for each financial stt characteristic(and document) i. The system creates new clearing lines to achieve an accurate document spit. ii. You can control this process with the zero balance indicator( in document splitting customizing)21. In customizing, you must first specify the FI characteristics for which you want document splitting to be carried out.

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22. Standard splitting characteristics: a. Business area b. Segment c. Profit center d. User defined characteristics can also be used for allocation 23. Always set the “Zero balance “indicator if you want to create a financial stt for the characteristic. The balance of the defined entities is then always 0 for “every posting”, ensuring entity balancing. 24. The mandatory field indicator has two meanings: a. Firstly, it is an extension of the field status for accounts in which the characteristics cannot be “entered” during document entry, and/or for accounts that cannot be controlled using the field status (vendor lines should always include a profit center or a segment. b. Secondly , it is a check as to whether a business process equivalent business transaction variant was selected( which determines whether a splitting rule can be found) 25. A splitting procedure, defined in brief, is the total of all splitting rules of all business transactions. As such, the splitting procedure defines how and under which circumstances document splits will be performed. In detail, this means each splitting procedure defines how each item category will be handled in the individual business transactions a. A business transaction is a general breakdown of the actual business processes that SAP provides and is assigned a wide variety of item categories. b. A business transaction variant is a specific version of the pre defined business transaction provided by the SAP and the modeling of a real business process for document splitting. c. An item category is a technical map of the posted line items. It describes the items that appear within a document. They are derived from, among other things, the G/L account categories d. An individual splitting rule defines which item categories can/should be split and at the same time defines which foundation can be used.Lesson: Default Values 1. Parameter IDs allow users to set default values for fields whose value does not change very often, for example, company code, and currency. When you execute the transaction, these values appear in the corresponding fields automatically. You therefore do not have to enter these values manually and can prevent input errors. 2. Using editing options, you can configure your screens for the following areas: a. Receipt entry: Users can “Hide” fields that may not be relevant for their jobs, such as foreign currency or cross company code transactions. You can also use special editing options for the single screen transactions b. Document display: Using list viewer, the user can select different display options for displaying documents.

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c. Open items: Users can choose line layout displays and posting options for processing open items, in other words, they can enter the amount of a partial payment or the balance of the new open item.3. When users log on to the SAP system, their user ID has specific properties that apply to it throughout the system: logon language, date format, and decimal notation. Users can also set a default printer for themselves. You can simplify the work for user maintenance by first creating a dummy user and maintaining the values in accordance with the accounting requirements and then copying the user.4. The system provides you with basic default value for document entry.5. If you have already entered a document, for the next document, the system proposes the company code that you entered in the last document.6. The system works on the basis of the “Document Principle”. All documents must balance before they can be posted to.7. To enter the different business transactions in accounting, the system offers you predefined document types and posting keys in the configuration.8. In the system, you can control whether the fiscal year is proposed when you display or change documents. In company codes with year – specific document assignment, it is helpful if the fiscal year is proposed – the system then proposes the document number of the last document processed and the relevant fiscal year.9. At company code level, enter the maximum difference permitted between the exchange rate in the document header of a business transaction and the exchange rate in the exchange rate table. If the system determines that this percentage maximum difference has been exceeded, it issues a warning message. In this way, incorrect entries can be recognized and corrected in time.Lesson: Change Control 1. Users can change documents that have already been posted. However, based on different rules, only certain fields can be changed. These rules can either be predefined by the system or be user specific. 2. Certain fields in both document header and the line items can be changed. a. Document header: Only the reference number and document header text can be changed. b. Line items : The system does not allow changes to the amount, the posting key, the account, or any other fields that would affect the reconciliation of posting 3. As users make changes to documents, following information is logged: a. The field that was changed b. The new and old values c. The user who made the change d. The time and date of the change 4. Prerequisites of field change : a. Posting period open b. Line item not cleared

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c. Posting as debit/posting as credit d. No invoice related credit memo e. No credit memo from down payment 5. You can differentiate between document change rules according to the following criteria: a. Account type : The account type allows users to define for customer, vendor, and G/L accounts b. Transaction class: Transaction classes are only used for the special G/L transactions bill of exchange and down payment. c. Company code: If the field is blank, the rule applies to every company code. 6. The conditions for changing a field are predefined. You can change them as follows: a. The posting period is still open b. The line item is not yet cleared c. The line item is either a debit in a customer account or a credit in a vendor account d. The document is not a credit memo for an invoice. e. The document is not a credit memo for down payment.Lesson: Document Reversal 1. Users can make errors when they enter documents. As a result, the document created contains incorrect information. In order to log the adjustments, the incorrect document must first be reversed. The document can then be re-entered correctly. 2. The system provides a function to reverse G/L, customer, and vendor documents both individually or in mass reversal. 3. A document can be reversed by: a. Normal reversal posting b. Negative posting 4. When you reverse a document, you have to enter a reversal reason that explains the reversal. The reversal reason also controls whether the reversal date is allowed to be different to the original posting date. 5. The normal reversal posting causes the system to post the incorrect debit as a credit and the incorrect credit as a debit. The normal reversal posting therefore causes an additional increase in the transaction figures. 6. The negative posting also posts the incorrect debit as a credit and the incorrect credit as a debit. This time the posted amount is not added to the transaction figures, but is subtracted from the transaction figures of the other side of the account. This sets the transaction figures back as they were before the incorrect posting took place. 7. Normally the system uses the normal reversal posting to reverse documents. The following prerequisites must be fulfilled to enable negative postings: a. The company code permits negative postings b. The reversal reason must be defined for negative reversal 8. Negative postings can be used to perform transfer postings of incorrect line items. The item removed from the wrong account by a negative posting and posted to the correct account by a

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normal posting. This can only be done with a document type that explicitly allows negative postings.Lesson: Payment Terms and Cash Discounts 1. The terms of payment are used to define: a. Baseline date for due date calculation b. Cash discount periods c. Cash discount percentage rate 2. The terms of payment are : a. Assigned to a customer/vendor master record b. Defaulted by the system or entered by the user c. Used in transaction line items to determine payment conditions 3. Terms of payment are conditions agreed between partners for the payment of invoices. The conditions define the due date and the cash discount offered for payment of the invoice within a certain period. 4. Terms of payment enable the system to calculate a cash discount and invoice due date. 5. Baseline date is the date from which the due date is derived 6. When you process a document, you enter the terms of payment so that the system can calculate the required conditions of payment. 7. If you have entered terms of payment in the master record, these are proposed. You can also enter or change them during processing. 8. You can enter terms of payment in the company code segment, the sales area segment, and the purchasing organization segment of a customer/ vendor master record. 9. The terms of payment defaulted when posting an invoice depends on where the invoice is created: a. If the invoice is created in Financials, the terms of payment from the company code segment are defaulted. b. If a customer invoice is created in Sales Order Management, the terms of payment from the sales area segment are defaulted. When you post the Sales Order Management invoice the terms of payment are copied to the FI invoice c. If a vendor invoice is created in Purchasing Management, terms of payment from the purchasing organization segment are defaulted. 10. When you enter a vendor invoice, you can also set a fixed cash discount amount or a cash discount percentage rate, i.e., the cash discount is granted independently of the payment period/date. To do this, you must make the appropriate entry in “Cash Discount” field. 11. Invoice related credit memos can be linked to the original invoice invoice by entering the invoice number in the “Invoice Reference” field during document entry. In this case, the terms of payment are copied from the invoice so that the invoice and the credit memo are due on the same date.

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12. Other credit memos: Terms of payment in other credit memos are invalid. These credit memos are due on the baseline date. To activate the payment terms on these non-invoice related credit memos, enter a “V” in the “Invoice Reference” field when entering the document.13. The day limit is the calendar day to which the terms of payment are valid. Using the day limit, you can store single or multi-part terms of payment in a terms of payment key14. The description for terms of payment includes the following elements: An explanation generated automatically by the system which can be replaced by your own explanation of the terms of payment and a sales order management text for printing on invoices.15. The account type defines the sub ledger in which terms of payment can be used. If you want to use terms of payment for both vendors and customers, you should define these using separate terms of payment keys and then only use them for one account type accordingly. This prevents any change that you make in terms of payment for your customers.16. Payment control: a. Using block keys, which can be entered in line items or accounts, you can block line items or accounts for payments or collection. These block keys can also be entered in payment terms b. A payment method (for each country, the system has payment methods defined that you can use in that country) is entered in the line items or the accounts. Like payment blocks, payment methods can be entered in the terms of payment.17. The baseline date is the starting date the system uses to calculate the invoice due date. The following rules apply for the calculation of the baseline date : a. The default values from which the baseline date can be determined are as follows: i. No default ii. Document date iii. Posting date iv. Entry date b. Specifications for calculating the baseline date: Fixed day used to overwrite the calendar day of the baseline date.18. To calculate the cash discount, you enter a percentage rate in the terms of payment. You also enter the number of days that the percentage is valid for in the same line. You can also add fixed days and months.19. The days and months specified in the terms of payment are used in conjunction with the baseline date to calculate the correct cash discount amount for the payment date.20. You can enter up to three cash discount periods.21. Day limits enable date – specific terms of payments in one terms of payment key22. You can define several versions of terms of payment, with each version having a difference day limit.23. The day limit is the baseline date up to which the payment term version applies. For terms of payment that are dependent, for example, on whether the baseline date is before 15th of the month, you can enter a two –part terms of payment under the same terms of payment key. The entry for the specified day limit is added to the terms of payment key. This results in two entries where different terms of payment can be defined

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24. The following terms of payment require the specification of a day limit a. Documents with invoice date up to the 15th of the month are payable on the last day of the following month. b. Documents with a later invoice date are payable on the 15th of the month after 25. An invoice can be paid over several months using an installment plan, or a portion of the invoice amount may be retained for payment at a later date. 26. The total invoice amount is divided into partial amounts due on different dates. 27. The system carries out this split automatically if installment payment is defined in the terms of payment. 28. To do this, select installment payment and do not assign cash discount periods or cash discount percentage rates. 29. Define an installment number, a percentage rate, and terms of payment for each installment. 30. The line item amounts correspond to the percentages of the total amount. The total of the line item amounts corresponds to the total amount. 31. Depending on the national regulations of your country, the cash discount base amount is the net value (total of G/L account and fixed assets line items, taxes not included, for example, in the U.S.A) or gross value (including taxes, as in the case in Germany). For each company code or tax jurisdiction code, specify which value the system is to use as cash discount base- this setting belongs to the global parameters of a company code. 32. The cash discount amount is entered either manually or automatically by the system using the rates in the terms of payment. You can still change the cash discount after you post the invoice. 33. When an open item on a customer or vendor account is cleared, the possible cash discount is posted automatically to an account for “cash discount expense” or “cash discount received” 34. You define the accounts for cash discount expense or cash discount revenue in the configuration. 35. If you post a vendor invoice with a document type for that net procedure, the amount posted to the expense or balance sheet account is reduced by the cash discount amount. The same amount is also posted to a cash discount clearing account to clear the posting. 36. When you use the net procedure, the cash discount amount is automatically posted when the invoice is posted. 37. When the invoice is paid, the system carries out a clearing posting to the cash discount clearing account. 38. If the invoice is paid after the cash discount deadline, the cash discount loss is posted to a separate account. 39. The cash discount clearing account must be managed on an open item basis.Lesson: Taxes 1. When posting an invoice SAP allows for taxes to be levied on the invoice amount as : a. Tax on sales/purchase b. U.S sales tax c. Additional taxes

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d. Withholding tax2. Two taxation types are possible : a. Federal / country level b. State / jurisdiction level3. In some countries (for example, Canada India, Brazil) taxes are even levied on both levels.4. US sales and use taxes are typical example of taxes below national level5. The system calculate the tax amounts from : a. Base amount with or without a cash discount b. Tax codes to check or calculate the tax amount6. The system supports the treatment of taxes as follows: a. Checks the tax amount entered or automatically calculates the tax. b. Posts the tax amount to tax accounts. c. Performs tax adjustments for cash discount or other forms of deductions.7. The expense or revenue account is the base amount, which can include a cash discount( tax base is gross) or exclude a cash discount (tax base is net)8. The tax code is used for the calculation procedure required to perform taxation functions on the SAP system.9. National regulations determine whether the tax base amount must be: a. Net amount b. Gross amount c. You define which amount is to be used for each company code or for the highest level of the jurisdiction code.10. The tax on sales and purchase is the balance of the sales tax (SAP term: output tax) and prior tax (SAP term : input tax)11. The output tax is levied on the net value of the goods and billed to the customer. It is a liability of the company to the tax authorities.12. Input tax is levied on the net invoice amount and is billed by the vendor. The input tax is a receivable which the company claims from the tax authority.13. Under certain circumstances, a company can deduct input tax that it has paid from its tax liability to the tax authorities: Only the taxes that have been levied on the added value of goods have to be paid to the tax authorities. The tax liability minus deductible input tax is the tax payable.14. Tax authorities can define that part of the input tax is not deductible. This tax amount can be posted to a separate expense account, or it can be distributed to the G/L account and asset line items.15. In the USA, there is a distinction between sales tax and use tax. Both taxes only apply to goods which are consumed by the customer. Goods that are used in production or for resale to a third party remain untaxed. If a taxable good is sold either sales or use tax is levied. Therefore, goods are only taxed once.16. Sales tax is collected by a vendor on sale and remitted to the jurisdiction of the customer.

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17. The system calculates sales tax based on material and customer location and posts it in Sales Order Management and Purchasing Management. If customers are exempt from taxation, you can specify this in their master records by entering the appropriate indicator.18. A tax calculation procedure for carrying out tax calculations is assigned to every country. The SAP ERP system is delivered with pre- configured tax calculation procedures for most countries.19. The tax calculation procedure contains: a. The order of steps which have to be taken in the tax calculation procedure( the “from step” indicates where the system calls the base value for the “step”) b. Tax types (condition types) that apply for the country. The system is delivered with the condition types necessary for each type of tax calculation. The tax calculation procedure already covers the correct condition types. c. Account key/transaction key that covers additional specifications and is used for the automatic determination for the taxes concerned. Predefined account keys are included in the SAP ERP system. We recommend that you use these std account keys20. A jurisdiction code is a combination of the codes of tax authorities that tax movements of goods and use their own tax rates. There are four possible levels below national level a. State b. Country c. City d. District21. The tax jurisdiction codes must be defined on every level22. When you post taxes with a jurisdiction code, you can enter the taxes per jurisdiction code per tax level.23. You enter the tax code when you post the document and this is the main connection to the tax calculation. This connection is different depending on whether the country uses a tax calculation procedure with tax jurisdiction codes or not.24. The tax code is linked with either of the following: a. Country key b. Combination of country and jurisdiction code c. The tax codes within a jurisdictional taxation method are date specific. In the configuration, you can choose whether the document date or the posting date is valid for the tax calculation25. In addition to other information, the tax code contains the tax rates. Tax rates are assigned to the tax types used in the tax calculation procedure. A tax code may have several tax rates entered for different tax types, but usually only one tax rate is entered.26. Some postings to tax relevant G/L accounts must have a tax rate of zero. This applies to: a. Items that are tax-exempt but have to be reported to the tax authorities b. Items that are created by tax exempt transactions such as good issue, goods movement, and so on.27. The tax type definition determines if the base amount is “percentage included” or “percentage separate”

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28. If the system detects a deviation between the tax calculated and the tax amount entered, it either issues an error message (check indicator set) or a warning message (check indicator not set). The check indicator should not be set for input tax codes because the user must post the tax amount from the invoice regardless of whether it is correct or not.29. Tax postings: a. The taxes calculated by the system are usually posted via a separate line item to a special tax account. This is the std scenario b. Taxes with certain transaction/account keys are distributed to the relevant expense/revenue item. This is the case for sales tax payables or other non- deductible input taxes.30. To enable the automatic tax account determination you have to assign the following data to the account/transaction keys that generate the tax items during posting: a. Posting keys (40 and 50 are recommended) b. Rules that determine which fields the account determination is based on c. Tax accounts31. When exchange rate differences occur because of tax adjustments in foreign currencies, these exchange rate differences are usually posted to the normal account for exchange rate differences. However, for each company code, you can specify that the exchange rate for tax items can also be entered manually or is determined by the posting or the document date. The resulting differences are posted to a special account.32. You define tax accounts ,i.e., accounts to which tax items are posted, in the field tax category by entering one of the following signs: a. < for input tax b. > for output tax c. The properties of the tax code define whether or not the tax posted is an input or an output tax.33. “post automatically only” must be selected if you do not want to post tax manually.34. All other G/L accounts may have one of the following entries in the “Tax Category” field: a. “” for non tax relevant postings(blank postings) b. “—“ for postings that require an input tax code c. “+” for postings that require an output tax code d. “*” for postings that require any tax code e. “xx” for postings with predefined tax code xx f. The properties of the tax code define whether or not the tax posted is an input or an output tax35. If the Postings Without Tax Allowed field is selected, you can post to this G/L account without specifying a tax code. This is especially necessary for tax postings within a jurisdiction code tax calculation procedure to foreign customers who do not have a jurisdiction code.36. Accounts for cash discounts need an entry in the Tax Category field if the system is supposed to post tax adjustments.

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37. Special tax codes: a. The acquisition tax code generates two posting items : It posts the acquisition tax to the credit side of the acquisition output tax account and the same amount to the debit side of the acquisition input tax account b. The output tax code for the tax exempt deliveries must have an EU code for goods, services, and subcontracting within EU to determine the relevant sales for the EC sales list. For technical reasons, you have to assign a tax account to the tax code even though no tax is posted.Lesson: Cross-Company Code Transactions 1. A cross-company code transaction involves two or more company codes in one business transactions. Example : a. One company code make purchases for other company codes b. One company code pays invoices for other company codes c. One company code sells goods to other company codes 2. A cross company code transaction posts to accounts in several company codes. This cannot be done by posting only one document is always assigned to exactly one company code. Instead, the system creates and posts a separate document in each company code involved. 3. In order to balance debits and credits within these documents, the system generates automatic line items which are posted to clearing accounts, for payables or receivables. 4. The documents which belong to one cross-company code transaction are linked by a common cross company code transaction number. 5. The tax calculated is always posted to the company code of the first item. Therefore, to ensure that the tax is posted to the same company code as the invoice item must always be entered first. 6. Certain countries’ tax regulations (e.g., Japan & Denmark) require that the tax amounts are posted in the company codes in which the expenses occurred. Therefore, the tax must be distributed from the first company code to the other company codes according to their expenses amount. You can do this using report RFBUST10. 7. Clearing accounts must be defined in every company code before a cross-company code transaction may be carried out. The clearing accounts may be G/L accounts, customer, or vendor accounts. 8. In the configuration you must assign clearing accounts to every possible combination of 2 company codes to allow cross- company code postings between these combinations(e.g., 3 company codes need 3*2=6 clearing accounts) 9. To reduce the number of clearing accounts, you can use just one company code as the clearing company code. In this case, you only have to assign clearing accounts to every combination of the clearing company code and other company codes (i.e., 3 company codes need 2*2=4 clearing accounts.) 10. When the cross company cod document is posted, the system generates a cross- company code document number to link all of the new documents together.

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Unit 5 ClearingLesson: Open Item Clearing 1. Open items are incomplete transactions, such as invoices that have not been paid. 2. For a transaction to be considered as completed, it must be cleared. A transaction is cleared when a clearing posting has been carried out for an item or group of items, so that the resulting balance of the items is zero. 3. Documents with open items cannot be archived and stay in the system until all open items are cleared. 4. Example for posting with clearing: a. An invoice is posted to a customer account. This invoice is regarded as an open item because at this point it is unpaid. b. The customer pays the invoice and the payment is assigned to the open item. c. The invoice is cleared with the payment and the resulting balance is zero. 5. Example for account clearing : a. Manually clearing an open invoice with related credit memo and payment on account. 6. When you use the Post with Clearing function, enter the clearing document amount and then select the open items that are to be cleared a. If the total amount of selected open items equals the amount of the clearing document, the system clears the open items by creating one or more clearing items. b. If the total amount of selected open items does not equal the amount of the clearing document, the system allows you to post the difference. 7. Posting with clearing can be carried out for several accounts, account types, and for any currency simultaneously. 8. You can carry out the “Post with Clearing” transaction manually or automatically using the automatic payment program. 9. Using the “Clear Account” function, you select those open items from an account that balance to zero. The system marks them as cleared and creates a clearing document. The clearing document number and the clearing date are entered in the cleared items. The clearing date can be the current date or a date that the user determines. 10. The “Clear Account” function works for any accounts managed on an open item basis in the G/L and the sub ledgers. 11. The “Clear Account” transaction can be performed manually or automatically using the clearing program. 12. Clearing program a. Steps in the clearing program i. Group items for each account ii. If balance is zero , items are marked for clearing

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b. Prerequisites for clearing i. User criteria must be defined in Customizing ii. Accounts to be cleared must be defined for automatic clearing c. Items that are not cleared i. Noted items ii. Statistical postings iii. Items with withholding tax entries 13. The system automatically fills the assignment field for a line item when you post items according to the “Sort Field” entry in the master record. 14. The assignment field can be a combination of up to 4 fields with a maximum of 18 characters. 15. If the sort key is set to the cost centre in a general ledger master record, then the assignment field in the general ledger line item is filled with the number of the cost center when that G/L account is used.Lesson : Incoming and Outgoing Payments 1. A manual payment is a transaction that clears an open item, typically an invoice, by manually assigning a clearing document. 2. An incoming payment, typically used in accounts receivable , clears an open debit amount. 3. An outgoing payment, typically used in accounts payable, clears an open credit amount. 4. A manual payment is processed in three steps: a. Data is entered in the document header. b. Open items are selected to be cleared. c. The transaction is saved. 5. The data entered in the document header is similar to the data entered when posting invoices. The document header consists of three sections a. The payment header b. The bank data c. Open item selection 6. Enter the following information in the payment header section of the document header: a. Enter the document date. This is the date on the physical document, b. The system proposes the document type dependent on the transaction called c. If the company code is not proposed, you have to enter it. d. The period specifications include the posting date and the posting period. The current date is defaulted as the posting date and the posting period is derived from the posting period. e. The currency specifications include the currency code, the exchange rate and the date for currency translation. If no exchange rate or translation date is entered, the exchange rate from the exchange rate table on the posting date is used. f. Any reference needed to identify the incoming payment may be entered in the reference document number, document header text and clearing text fields.

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7. Enter the following bank data in the next section of the document header. a. The account is a general ledger account used for incoming and outgoing payments. b. The payment amount is the total payment amount. c. The bank may charge bank charges for its services. d. The value date is the due date used to evaluate the position in Cash Management. It may be defaulted by the system. e. The text is an optional description of item. Start the line with “*” to enable the text to be printed on external correspondence too. You can also work with text templates- the user can select an entry from a list of std texts. f. The assignment number is either created by the system or you can enter it manually.8. Enter the following “open item selection” data in the next section of the document header: a. Account and account type: In this area, “Account” refers to the account number of the business partner and the account type of this account. b. Normal open items and/ or special G/L transactions: You can select normal open items and / or special G/L transactions for processing. c. Payment advice note number : You can use the number of payment advice note to select the open items. d. Other accounts : you can select other accounts and process their open items at the same time. e. Additional selections: you can use additional selection criteria defined in the configuration to select open items. You can use the “distribute by age” or “automatic search” functions to speed up the selection process.9. The next screen lists all of the unassigned, open items. These could be payments, debit or credit memos, or invoices. Depending on your settings all of the items can be active or inactive.10. The first step in processing open items is to activate the required line items before you can assign a payment.11. The amount entered is assigned to the appropriate line items and their cash discount12. There are several options for activating or deactivating line items: a. Editing options for open items: Set the “Selected Items Initially Inactive” indicator. b. Double click the amount. c. Selection of action menus and function keys : There are different menus and keys are available.13. You can post the document if the amount entered is the same as the amount assigned.14. The cash discount granted is determined by the terms of payment of the line item. The cash discount is taken into consideration for calculating the assigned amount.15. You can change the cash discount by overwriting the absolute cash discount or by changing the cash discount percentage rate. It must not exceed the limits set in the tolerances.16. Posting the payment: a. Display overview b. Simulate to review automatically generated items. c. Correct any mistakes. d. Post

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17. If the debits and the credits agree, you can post the complete document. 18. If you subsequently discover that the document contains an error that has to be corrected, reset the cleared items and then reverse the document. You then have to re-enter the original posting correctly. 19. Automatic postings for clearing open items: a. Cash discounts expense or revenue b. Cash discount clearing (net procedure) c. Tax adjustments d. Exchange rate differences e. Bank charges f. Clearing for cross- company code payments g. Over – or underpayments within tolerances. 20. You can enter bank charges when you enter the bank data; they are automatically posted to the G/L account. 21. In order to perform manual cross-company code payments you have to assign a clearing transaction to the combination of paying company code and the company code for which the payment is being made. Then, when you select open items, open items are displayed from each company code.Lesson : Payment Differences 1. In accounting , tolerance can be divided into three types: a. Employee tolerance groups b. G/L account tolerance groups c. Customer / vendor tolerance groups. 2. The employee tolerance group is used to control: a. Upper limits for posting transaction b. Permitted payment difference 3. The G/L account tolerance group is used to control: a. Permitted payment differences ( e.g., for automatic clearing procedures) 4. The customer/vendor tolerance groups provide specifications for: a. Clearing transactions b. Permitted payment differences c. Posting residual items from payment differences d. Tolerance for payment advice notes 5. Configuration of tolerance groups a. Tolerance groups for employees: i. Accountant 1 ii. Accountant 2 iii. Accounting manager b. Tolerance groups for customers/vendors: i. Good customer/vendors

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ii. Not so good customers/vendors iii. Cash only customers/vendors c. Tolerance group for G/L accounts: i. Clearing accounts(external procurement) ii. Clearing accounts(internal procurement)6. Assign tolerance groups to : a. User master data b. G/L account master records c. Customer/vendor master records7. You have to carry out two steps to use tolerance groups: a. Group definition i. The tolerance group is defined by a group key, company code, and a currency code ii. The group key is a four character alphanumeric key iii. The key “______”(BLANK) is the std tolerance group and is required as the minimum tolerance group. b. Group assignment i. Employee tolerance groups may be assigned to employees ii. G/L account tolerance groups may be assigned to G/L account master records. iii. Customer /vendor tolerance groups may be assigned to a customer or vendor master record iv. If no tolerances are assigned, the default tolerance group “____”(blank) applies.8. The specifications for permitted payment differences can be found in both types of tolerance groups. They control the automatic posting of cash discount adjustments and unauthorized customer deductions.9. The system takes the entries in both groups into account during clearing. The payment difference has to be within both tolerances to be handled automatically.10. A payment difference normally occurs during the clearing of an open item. The difference is then compared to the tolerance groups of the employee and the customer/ vendor and is handled accordingly; a. Within tolerances : Automatically posted as either cash discount adjustment or unauthorized deduction. b. Out side tolerances : Processed manually11. If the payment difference is too high to be immaterial, it must be processed manually. The payment can be posted as follows: a. Partial payment b. The payment difference may be posted as a residual item. c. The payment difference can be posted to an account assigned to a reason code or written off by manually entering a new posting item. d. Payment on account.

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12. If the payment difference is outside of the tolerance it has to be processed manually. The user can : a. Post the payment as a partial payment, where all the documents remain in the account as open items. b. Post the payment difference as a residual item, whereby only the residual item remains in the account and the original document and the payment are cleared. A new document number is created with reference to the original documents. c. Post the payment difference to a different account as a difference posting using reason codes and automatic determination. d. Write off the difference (manual account assignment) 13. The customer/vendor tolerance groups contain entries that control the residual items. These specify: a. Whether the terms of payment of a residual items are the same as those of the cleared item or whether the terms of payment are fixed. b. Whether cash discount is granted only partially and not for the whole amount. c. By specifying a dunning key, whether the residual item has a maximum dunning level or is printed separately. 14. If you know the reason for a payment difference, you can enter a reason code. 15. Reason codes are used to describe the reason for the payment difference. To assign more than one reason code to a payment difference, click on “distribute difference” 16. Reason codes can be assigned to : a. Difference postings b. Partial payments c. Residual items 17. The reason codes can be used to analyze and post process payment difference. Additional optional functions are : a. Control of the type of payment notice which is sent to the customer b. Control of the account where a residual item is posted c. Automatic posting of a residual item to a specified G/L account. d. Exclusion of residual items from credit limit checks because they are disputed.Lesson : Exchange Rate Differences 1. When clearing open items in a foreign currency, exchange rate differences may occur due to fluctuations in exchange rates. 2. The system posts these exchange rate differences automatically as realized gains or losses. 3. The system posts the difference automatically to the revenue/expense account for exchange rate differences that you defined during configuration. This prevents incorrect postings. 4. The realized difference is stored in the cleared line item. 5. Exchange rate differences are also posted when open items are valuated for the financial stts. These exchange rate differences from valuation are posted to another exchange rate difference account and to a financial stt adjustment account.

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6. All reconciliation accounts and all G/L accounts with open item transactions in foreign currency must be assigned revenue/expense accounts for realized losses and gains. 7. One gain/loss account can be assigned: a. To all currencies and currency types b. Per currencies and currency types c. Per currency d. Per currency type Unit 6 Cash journalLesson : Cash Journal Configuration 1. The cash journal is a tool for managing cash that was offered with R/3 release 4.6. it supports posting cash receipts and payments. 2. With this tool you can a. Create a separate cash journal for each currency b. Post to customer, vendor, and G/L accounts c. Run several cash journals in each company code d. Choose a random number for cash journal identification ( a four –digit alphanumeric key) 3. To set up a new cash journal for a company code, you have to enter the appropriate values for the following fields: a. The company code in which you want to use the cash journal b. The four digit cash journal identification and name c. The G/L accounts to which you want to post the cash journal business transactions d. The currency in which you want to run the cash journal e. The document types for: i. G/L account postings ii. Outgoing payments from vendors iii. Incoming payments to customers iv. Incoming payments from customers 4. There are two places where you can define new cash journal business transactions: in the cash journal itself or in Customizing. When you give the business transaction a name , you can base it on the type of business transaction. 5. To create a business transaction, make the following settings: a. The company code in which the business transaction should be created

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b. The type of business transaction c. Specify the tax codes for the business transactions d. For business transaction categories E, R, C, and B , you can set an indicator to enable the G/L account for the business transaction to be changed when the document is entered. In this case the G/L account is only a default value. e. For business transaction categories E and R , you can set and indicator to enable the tax code for the business transaction to be changed when the document is entered. If no tax code has been defined, you have to specify one when you create the document. f. Once saved , the business transaction is assigned a number automatically. During document entry, the business transaction can be pulled up by its name or its number. g. You can set an indicator that blocks the business transaction for further postings. 6. Std business transactions: a. Expense (E) i. Expense/ cash desk b. Revenue (R) i. Cash desk /revenue c. Cash transfer i. From cash journal to bank (B) ii. From bank to cash journal (c ) d. Accounts recceivable (D) e. Accounts payable (K)Lesson : Cash Journal Transactions 1. The cash journal is one of the Enjoy business transactions that you canprocess on a single screen. On this screen, you can enter, display and change cash journal entries. 2. You can save cash journal entries locally in the cash journal sub ledger, and copy or delete them. The cash journal entries saved are posted to the G/L, eg, at the end of the working day. 3. You can also print the cash journal entries you have saved(receipts) as well as the cash journal entries posted in the time period displayed. The print forms are selected in Customizing. 4. The follow-on documents that are posted as a result of cash journal entries are displayed. 5. You can also copy and delete cash journal entries saved and display the deleted cash journal entries. 6. From Release 4.6C, you can also enter checks in the cash journal. 7. In the SAP system you can enter a cash journal document with a document split. In other words, a cah journal document can contain several items with different tax codes and/or account assignments relevant to cost accounting. When the cash journal document is forwarded to Financial Accounting, only one accounting document is therefore created. 8. In the cash journal you can create a business transaction linked to a one-time account. If you use a one-time account in the cash journal, the dialog box for entering the one-time data is called automatically and the entries saved in the cash journal.